SUPPLY CHAIN FINANCING

SUPPLY CHAIN FINANCING

MR. PRAVEEN, DR. BAJRANG YADAV
MBA(Finance). NIMS University. Jaipur, India Assistant Professor, NIMS University. Jaipur. India 1.rajera055@gmail.com

ABSTRACT: With an increased importance of working capital management and supply chain risks, supply chain finance has gained an increasing interest from organizations across the world. A buyer- centric supply chain finance solution can create a ‘win-win’ situation for buyers and suppliers, by allowing buyers to extend payment terms and suppliers to get payments in advance. This allows both buyers and suppliers to free working capital, and potentially provides financing at favorable rate for suppliers.

For a successful supply chain finance initiative, three crucial critical supply chain finance project factors have been identified, namely: (1) The right banking and platform provider partner(s); (2) Internal sponsorship and top-management support; and (3) Degree of automation and order-to-pay process alignment.

The purpose of the framework is to act as a guideline, and not to be followed exactly. Ultimately, the focal firm need to evaluate its expected benefits with the expected costs and risk, in order to make a supply chain finance decision.

KEYWORDS: Reverse Factoring, Dynamic Discounting, Management, Early Payment Solutions, Risk Evaluation, Empirical Analysis